Category: Validations

“What you accomplish through your efforts measures effectiveness. What you accomplish through others measures of leadership. How others respond measures success.” – Shawn Carson

Measuring a startup is a difficult thing.  Especially when you are in the pre-revenue stage.  Sure there are strategic milestones such as prototypes and product releases but these in themselves will not indicate success; only the result of effort.

You need to develop measures that indicate how others react to what you are doing.  We call these validations.  Here is a short list:

  • Customer Feedback – have you talked with 100 or more customers about your innovation?
  • Paying Customers – For the startup, these are supreme indicators that people will pay for what you are offering.
  • Key Employees – is your value proposition attractive enough to bring on highly qualified people who are willing to work for upside?
  • Partnerships – You won’t get there by yourself.  Do you have relationships with value added partners?
  • Advisors – Are there world class people offering their time through coaching and mentoring?
  • Investors – Has anyone shared your risk?

You should factor validations in your key measures and track them as carefully as any product development activity or financial data.  If the validations don’t come, you are on the wrong path.

 

Blogging Gazelle is published daily by Shawn Carson

Innovation is the specific instrument of entrepreneurship…the act that endows resources with a new capacity to create wealth.” – Peter Drucker

Wealth is an outcome, not a mission.  It is a result of the creation of value.  Money is one way to measure value but there are others.

The creation of value consumes resources.  Money is a resource but there are others.

Innovation creates value that did not exist before, which is a powerful tool of the entrepreneur.  But equally powerful, and necessary, is the ability of the entrepreneur to gather the necessary resources to bring that value into being.  These include money, people, partnerships, advisors, investors and early customers.  We call these validations.

If you measure anything at all, measure your validations.  They are the leading indicator for the Startup.  They lead to success in the business.

 

Blogging Gazelle is published daily by Shawn Carson

“A validation is a third party endorsement” – John Morris

The concept of validation is fundamental to the startup and it makes all the difference in how you track progress and how you create value early.

The strategic planner says to form the strategy, generate milestones and then relentlessly pursue the milestones.  This is true but it’s not enough.  Milestones are a measure of what you accomplish but not everything you accomplish adds value to your startup.  A great example is the formation of your company.  You have to do it but nothing about having an LLC or a C-Corp in itself will cause a customer to buy your product or an investor to invest.

It may be months before you generate any tangible evidence of value – that is, generate cash!  So how do you create value in lieu of cash?  By getting others to respond to your efforts – a third party endorsement.  This is the definition of a validation.  Examples of validations include:

  • Paying customers!!!!!! – early traction is fine but it’s better if you get paid
  • A stellar team – good people have plenty of opportunity.  All the better if they close to join you
  • First class advisors and mentors – these people bring their contact list and their influence
  • Key partnerships –  companies that add value for upside in your success
  • Investment capital!!!!

All of these are evidence that others are willing to bet on your vision and have put their skin in the game.

Checking off milestones is fine but they don’t mean anything unless they lead to validations.  Measure these and highlight them in your company pitch.

 

Blogging Gazelle is published daily by Shawn Carson

“What you accomplish through your own efforts is a measure of your effectiveness…” – Shawn Carson

“…What you accomplish through the efforts of others is a measure of your leadership ability. What others do to substantiate your efforts is a measure of your success.”

The first two parts of this quote come from the leadership principles in the books of John C. Maxwell.  There is a third aspect that indicates the success of the effort and that is how others respond.  We call that a validation.

You can have a masterfully conceived plan and you may communicate it flawlessly to your team but if your customers don’t buy, your business will fail.  So along with tracking milestones, you need to identify and track validations.  They are the true measure of success.  A brief list of categories include:

  • First customers
  • Attracting key staff
  • Attracting advisors and mentors
  • Fund raising
  • Attracting key partners

The thing about all of these is that these people have to choose to be a part of your company.

BloggingGazelle is published daily by Shawn Carson

“Indeed the safest road to Hell is the gradual one—the gentle slope, soft underfoot, without sudden turnings, without milestones, without signposts.” – C.S.Lewis

Moral and spiritual wisdom often apply.  Do you have strategic milestones that indicate how well the business is doing?  It’s tough when you are a pre-revenue company.  Consider the use of Validations – those things that others do in response to your efforts.

  • Early Customers – get them them as soon as possible.  That is the only way you can really find out what they are willing to buy.
  • Funding Partners – Angel investors choose their activities carefully.  If you are chosen for an early investment, it’s a sign you convinced someone else of your value proposition
  • Partnerships and Alliances – You can’t get there alone.  Good partners are other businesses who share your risk by giving you a capability you do not have.
  • Staff – Attracting others to join your vision is a powerful validation.  Get the best.
  • Advisors – Successful, experienced people are looking for someone to mentor.  Put together an advisory board of people that dress up your skill set and gaps in experience.

Your efforts should include acquiring validations.  They reduce risk and provide a roadmap of progress.